Although a consensus is building that the U.S. economy is slowly beginning to turn in a positive direction, CPAs and the financial strategists they rely upon are not urging clients to make wholesale shifts in their investment portfolios. Indeed, some are turning somewhat more cautious in the short term.

Regardless of any expectations they may have about economic and financial market patterns in the near future, however, CPAs are keeping steady pressure on clients to adhere to their broad guidance on maintaining asset allocations that will keep them in good shape over the long haul, through the inevitable cyclical market patterns ahead.

"A rebound will occur," said Ted Saneholtz, CPA, CFP and president of Summit Financial Strategies in Columbus, Ohio. "Whether it's in 2010 or 2011 is a moot point to me. We feel that an asset allocation strategy in itself should be addressing the market cycles."

A more nuanced, and cautiously optimistic, analysis was offered by Jaco Jordaan, CFA, senior portfolio manager for H.D. Vest Advisory Services: "Many important economic indicators ... do appear to be pointing towards a recovery," he said. "Unfortunately, the indicators are not unanimous."

AGAINST THE WIND

Tempering his optimism further, Jordaan said, "We still face significant headwinds to the main driver of GDP - consumption."

"It's difficult to see how consumption will pick up in the face of what so far has been a jobless recovery with unemployment remaining near 10 percent, a housing market that continues to produce foreclosures and has left many borrowers upside down, and a resulting increase in savings as consumers are either attempting to de-leverage, or are simply building up emergency reserves because of uncertainty."

Jordaan said he'll be more confident the economy is on solid ground when job creation (and the resulting uptick in consumer spending) returns, unaided by temporary stimuli like "Cash for Clunkers" tax incentives.

Josh Willard, senior vice president of Coghlan Financial in San Diego, said that he'll be sanguine that the economic recovery will be sustainable when it's apparent that the federal government has a plausible exit strategy from the investments and loans it made to bail out the banking industry and that it will be able to soak up the excess liquidity it pumped into the economy in 2008-2009 without inadvertently killing the recovery.

And what are the portfolio management implications of all this for financial advisors? It seems to boil down to their overall approach to investing.

"My philosophy is that everything goes in cycles," said Marc Wagner, a CPA in Yardley, Pa., who handles his investments through broker-dealer H.D. Vest. "We try not to gamble on what we think may or may not happen in the short run. We keep clients well-diversified and help them deal with whatever comes down the road."

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